Borrowing and Tradable Debt

[dexters]

I think Firaxis could easily expand on the depth of the game by introducing an enhanced financial system.

First, I think Civs should be able to accure debts. The amount of debt a Civ can accure is based on the size of its GDP.

Debts can only be accured in only one way. BORROWING. Borrowing becomes allowable in a "Financial Market Screen" once Banking is discovered.

This means negative income will not go into debt. When Civs hit 0 gold in treasury and still have negative income, they must sell off improvements. The reasons I want to keep it this way is so two fold

1) AI may become addicted to deficit spending and dig themselves in the hole early in order to out research the humans and other AI Civs

2) Human manipulation with GPT deals.

AI would be programmed to use borrowing to leverage their Civilization. This means it will have an objective, say rush a Bank. It will measure the relative worth of rushing the improvement over borrowing and make a decision. Borrowing may also be used as a line of credit for AI and human players.

The financial instrument borrowed will be BONDS, for simplicity’s sake. This means if I borrow 1,000 gold from the bank maturing in 20 turns, I pay “1,000 X interest “every turn, for 19 turns and on turn 20, I repay the last year’s interest + the initial borrowed amount.

Wall Street

With the Wall Street small wonder, players and AI can now go into the “international market” to raise money. This will be a revision of the “borrow money feature” in the current Civ game.

Just like borrowing from the bank, AI/Human Civs borrow from each other. But the money is deposited first in this international market. Civilizations enter into a pool, depositing excess gold into it. Borrowers enter this pool and borrow whatever they need. Interest payments flow back through the pool to the depositors in the pool.

There is obviously a switch period between the old closed Banking system to the international money market. To give the international system some liquidity during the switch (liquidity = cash) all Civs who build Wall Street will automatically have all their debts transferred from the ownership of the bank to the international market. Interest paid on the existing debts will go to the pool and not to any Civs in particular.

The Interest Rate

Pre-Wall Street, Interest rate for the BONDs will be static. Set by the AI using a basic formula which that’s into account the GDP of the Civ, it’s income, and its strength relative to other Civs.

After Wall Street, Civs will now borrow from the international market and not their local banks. At this point, the interest rate will be determined by the international supply of gold and the demand for it.

Caps

Caps on how much each Civ can deposit and borrow may be needed to avoid manipulation. But I think it would be a minor issue. Assuming the AI is programmed to use the borrowing system and lend money to the system and generate income for itself, I don’t think it will be an issue. But it does give players a way to profit from say a world war they are not part of, since all the civs will be in war mode and be hungry for cash.

Thoughts?

[vmxa1]

Well I suspect the AI would be unable to make proper use of debt, kind of like most people or governments.

[CrONoS]

vmxa1: "suspect the AI would be unable to make proper use of debt, kind of like most people or governments"
---
Hahahhahaahha that's a funny one and that's the problem!

[dexters]

[vmxa1]

Yeah it is the real problem with tweaking the AI or adding things. Will it be able to use it or in fact actually be worse than it was.
If you watch the AU you can see how many of the things tried were not handle all that well, they had to do many trials to get any progress.

[Sultan Richard]

Yet another brilliant idea from Dexters


On top of what he's suggested, could this idea entend to the formation of an IMF-esque Wonder (like UN) where bankrupt nations could be bailed out of a recession with political strings attached? Maybe this IMF thing could be attached to the UN where the leading nations pledge X gold into a common pool and the money to be drawn upon by the UN/IMF with the money owner's consent.

Aslo, there could be private/public merchant banks like Rothchild's, Bank of England, Hong Kong-Shangahi etc which players could borrow off, with different economic and political factors to differentiate the lot, (*draws breath*) which leads to my next point where some players could opt to become Civ-Switzerlands where they become hotbeds of economic activity.

[MyOlde]

Sounds like you're creating a new game. Not a bad one, either. Talk to Sid about it immediately!

[Kuciwalker]

They could model it after GalCiv.

[epics]

talking about borrowing and stuff:
in my one game I managed to lend some money to AI: i gave France 1000 gold and they gave me 53gpt. What a bargain .
Maybe not very profitable but it's something.

[David Murray]

You already can borrow money. You can even offer the AI the chance to borrow money.

Initiate contact with a leader. Offer/request a sum of money and offer/request in turn a per turn sum. Voila!

PS - I once offered Lincoln 190 gold lump sum in return for 10 gold per turn over 20 turns. I was very pleased with myself when he smiled and accepted!

[dexters]

Originally posted by David Murray
You already can borrow money. You can even offer the AI the chance to borrow money.

Initiate contact with a leader. Offer/request a sum of money and offer/request in turn a per turn sum. Voila!

PS - I once offered Lincoln 190 gold lump sum in return for 10 gold per turn over 20 turns. I was very pleased with myself when he smiled and accepted!

I'm well aware of this. The loaning lump sum for gpt with profit is more an offshoot of AI valuation system rather than a formalized market where debt can be traded.

What I am proposing a more formal system where you can hold of debts and AI can hold debts. And AI and human players can spend money on credit, instead of the iron rule of having a positive sum in the treasury.

[epics]

dexters: what happens if we can't pay our credit?

[dexters]

Buildings are sold to pay. Or cities switch to wealth.